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SEC Awards Whistleblower with $2.2 Million in First ‘Safe Harbor’ Ruling

The U.S. Securities and Exchange Commission (SEC) has announced a new whistleblower award of more than $2.2 million, the first award from the agency to be paid out under the “safe harbor” rule.

In the case, a former insider of a company took action in compliance with Exchange Act Rule 21F-4(b)(7). It indicates that if a whistleblower provides information to a different federal agency, but then submits the same information to the SEC within 120 days of that initial disclosure, the SEC will still treat the information as though it had been sent to the SEC at the same time it was submitted to the prior agency.

The whistleblower initially reported the information to a different federal agency, which then referred the case to the SEC. Within 120 days of that first report, the whistleblower sent the same information to the SEC and then cooperated with the investigation, which led to a significant enforcement action.

This so-called “safe harbor rule” is important because whistleblowers might not necessarily know which agencies they should report to, especially if they are not advised by attorneys. This helps whistleblowers still obtain awards for their reports even if they don’t first make those reports to the SEC.

SEC whistleblower program continues to grow

With this latest SEC whistleblower report, the program is now awarded more than $264 million to 54 different whistleblowers since the very first award was issued in 2012. All payments of these awards are made from an investor protection fund established by Congress and financed through monetary sanctions paid by violators of security laws.

To learn more about how you can file a whistleblower claim with the SEC’s program, consult a knowledgeable Dallas attorney at Kardell Law Group.


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